The wait is over! View the November 2023 Rentsync National Rental Demand Report.
In this comprehensive national rental demand report, we outline significant changes in unique leads per property across Canada. The data presented here is the largest data-backed analysis of rental market demand in Canada using aggregate ILS data (over 20 rental listing sites).
The data included in the Rentsync National Rental Demand Report can be used to compare and contrast demand and lead volume for the properties you manage within a given city and will allow you to make more sound decisions on marketing and advertising.
As you observe demand and unique lead volume percentage, it's possible to measure this against your own metrics, and see whether you are in line with current industry trends, and if not, how to pivot your strategies as a result.
In order to present this data, Rentsync has determined three key calculations for each area of the report, they are as follows:
Demand Score: Our demand score is rated out of 10 (with 10 being the highest score a city can receive), and is calculated based on unique leads per property, per city, and compared against benchmark data.
For example: If New Westminster, BC received a demand score of 9.0 this month, versus 6.3 last month. Therefore, New Westminster experienced an increase in its demand score by 2.7 this month.
Demand Percentage (% +/-): This is determined according to the year-over-year (YOY) or month-over-month (MOM) increase or decrease in unique leads per property.
For example: The month-over-month unique leads per property in New Westminster, BC went up 42% in April versus March. In April 2022, the year-over-year Demand Score in New Westminster, BC went up 6.0 points based on an increase of 137% unique leads per property compared to April 2021.
Position: The position is determined by unique leads per property, with cities that have at least *20 properties or more. The position will vary depending on demand.
For example: This month, New Westminster, BC moved up 5 spots to the top spot on the Top 40 Canadian Cities in Demand. Year-over-year New Westminster, BC moved up 20 spots from last year to claim the top spot in April 2022 versus April 2021.
*The following report provides month-over-month rental listing data for April 2022 versus March 2022, as well as a year-over-year comparison from April 2022 versus April 2021. It also outlines the month-over-month and year-over-year trends in primary, secondary, and tertiary markets.
Month-over-month (M/M): April saw a serious shift with tightening market conditions, the supply of available properties decreased by -3.9%, and the number of prospects increased by +2.3%. This resulted in an increase in the average leads per property of +6.4% which has resulted in more competition amongst renters as the supply of available properties is not able to keep pace. This is however not consistent across the country with much of the newly experienced demand experienced in primary markets resulting in a -14% drop in overall demand scores month over month.
*While March seemed like the start of a gangbuster leasing season, April takes a step back to remind us of the trends being experienced within renter's market preferences and most importantly the dominance of primary markets. Primary markets lead the uptick in demand at +9% and represent over 68% of rental inquiry volume across the country up 4% month over month.
Year-over-year (Y/Y): Overall, in Canada, our multifamily demand score shows an increase of +79.7% in April 2022 versus April 2021 however, this value is down month over month and continues to shrink. Although overall demand figures are up; both prospects -39.4% and available properties -38.3% are down respectively. The loss in prospects is primarily due to the loss of Facebook marketplace as a source of property leads, while a reduction in property availability is simply a result of strong leasing activity and a subsequent reduction in vacancies. These conditions suggest that Canada has likely returned to its pre-covid leasing conditions, and the supply of available units continues to decrease at a higher relative rate than that of the demand for apartments. Overall, the year-over-year (April '22 vs April '21) market snapshots are as follows:
*The year over year analysis indicates that rental demand has maintained an upward trajectory as markets stabilize and enter the annual leasing season.
*Demand is determined by calculating unique lead volume per property by market. Due to a decrease in available properties in the rental housing market, this report will only highlight the top 40 cities in Canada based on our threshold that requires at least 20 properties to be included in our data sample.
Canadian cities experienced varying levels of change month over month, with major markets experiencing a majority of the month-over-month growth.
*April, shows a departure from March's explosive growth with a severe tightening of market conditions, and relatively little movement in demand scores amongst the top 10 markets. Rental rates continue to climb upwards as renters continue to compete for an ever shrinking supply of available units.
*Year over year we see the continued long-term normalization of renter traffic and inquiry volume with exaggerated growth figures and wild fluctuations in renter demand. Unlike our current monthly trends, the biggest annual gainers are secondary markets with serious growth in renter traffic and achievable rental rates. New Westminster has just replaced Surrey at the top of the list due to its higher-than-average leads per property due to a marginally higher volume of prospects and similar number of available properties. This market has also been reinvigorated over the last quarter and been able to attract much of the rental demand which is lost to Surrey over the previous 2 years. Whereas during the pandemic many chose to move further from Vancouver, the emergence of office work has motivated many to return closer to major markets even if only moving across the Fraser River.
Renters have mostly returned to their preferred major markets which put a stop to the trend of urban emigration experienced throughout the last 2 years. Typically focused on smaller one-bedroom units, many are now shifting their focus to larger 2 and 3-bedroom units. Whether due to the need for at-home workspace or simply want for more living area, the rents for these units are accelerating.
Tertiary markets remain strong attractors for younger families and will continue to be in high demand as rental rates continue to grow and price many out of major housing markets.
In order to better segment our data and analyze what is happening within specific markets across Canada, we have broken down our data into 3 key market segments:
Here we will gain a deeper perspective on demand across larger populations and any movement due to the impact of COVID-19 on the rental market.
In April, the demand posed by prospective renters accelerated while the number of available properties decreased however this does not reflect market conditions across the country. More renters continue to leave smaller tertiary communities in favour of larger markets which has created a shift in demand scores across markets of various sizes.
Tertiary markets are experiencing a shrinkage in rental demand, while primary markets are seeing tighter market conditions month over month.
*Overall unique leads per property increased by +9% in primary markets this month.
Primary markets continue to be the strongest growers month over month with a growing demand by prospective renters +6.2%. Primary markets are not immune to the growing shortage in availability with fewer available properties being divided amongst a growing number of prospects driving up the average number of leads per property +10.3%. The continued warming of the season will push more into the rental market which is likely to continue this trend of tightening conditions and more competition amongst renters.
(See the year-over-year analysis below, for more perspective on demand in primary markets.)
*Overall, year-over-year demand scores have rebounded when compared to the same time last year and have increased +141%. Unique leads per property are more compressed and are up +6.3%. A return to more typical conditions and the push for many to return to the office has caused most of the demand lost to smaller markets throughout the pandemic to return which has in turn created more positive market conditions year over year.
The strong ongoing rental demand has driven down property availability which in turn created more competition within available units which in turn has allowed for a strong year-over-year rent growth.
*Secondary markets saw a decrease of -1% in demand scores, and a -0.8% decrease in unique leads per property this month. Both property availability and prospects decreased at the same relative rate which caused these markets to contract marginally.
Regardless of the broader demand within these markets, rental rates remain strong and continue to trend upwards. 2-bedroom units show the highest rates of growth in rental rates as those renters who are driven to secondary markets continue to show a preference for larger multi-bedroom units when making housing decisions. Although there remains a clear preference amongst many to move back to primary markets these communities will continue to offer compelling housing options with larger unit sizes, more open layouts, and a greater supply of multi-bedroom units all of which are factors that are becoming increasingly more important to many when making housing decisions.
*Overall, year-over-year demand scores are up +127%, and unique leads per property are up +0.3% in secondary markets this year versus this time last year.The significant increase in demand scores is due primarily to the lower overall average leads per property being achieved which has resulted in overall demand scores increasing. This does not however mean that specific renter demand is up as the total number of prospects has declined directly in line with the number of properties year-over-year.
Regardless almost all secondary markets saw a surge in rental rates year over year attributed primarily to a return to work and tighter market conditions with vacancies which more closely reflect pre-covid market conditions.
*Demand scores decreased on average by -5%, and unique leads per property decreased by -3.8% this month versus last month in tertiary markets.
Although many have been driven outside with the warming weather this has not been true for tertiary markets which saw the highest relative decrease in prospects at 6.4% and resulted in fewer leads per property. If this trend continues than it is likely that these communities will begin displaying greater variability in rental rates with renters no longer competing for a shrinking supply of units.
(See the year-over-year analysis below, for more perspective on the rise in demand in tertiary markets.)
*Overall, year-over-year demand scores are up in tertiary markets, increasing by +59% in March 2022 versus March 2021. Unfortunately, this does not paint the full picture as leads per property are down -29.6% year over year. Prospects have declined at approximately twice the rate of properties which has resulted in a severe reduction in average lead volume.
Although tertiary communities experienced gains throughout the pandemic in regards to increasing rental demand, much of this growth has receded indicating some of the appeals which had attracted many households has dissipated with many returning to larger communities. While rents have mostly stabilized with most markets showing strong rent growth, the actual demand for rental product suggests that this trend is unlikely to continue.
Regardless, the overall trend of moving to smaller communities persists within many households suggesting that moving forward there are likely to be several markets that successfully maintain this trend and become more rental-focused in the future.
This year is set to be the most competitive and varied leasing season in recent memory. With a strong start in March, many expected additional inventory to be released and create serious competition amongst a growing number of renters. The reality of the market is however much more complex and market dependent.
Renters are clearly showing a preference for larger and well-amenitized communities when making housing decisions. Primary markets were the only markets which consistently showed growth in prospects and overall demand scores, whereas the further one goes along the scale of municipalities the greater the associated drop-off in prospects. Whether this is simply because demand has been achieved within these communities and the markets are achieving an equilibrium, or because renters are redirecting their focus towards larger markets; the lessons learned by property managers are the same.
This leasing season renters have become more discerning than ever about their housing requirements, and unlike in previous years, they are willing to look elsewhere to get them. Location is not the first priority when making housing decisions which should tell multifamily marketers that the work they put into differentiating their properties is more important than ever before.
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